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Corn supplies remain tight but not as tight as expected as USDA only reduced ending stocks 50 MB in the February report to 1.502 BB. The bulls horns drooped when they saw this as a reduction of 139 MB was anticipated. Looking at exports, they have been trending higher for the past twelve weeks with inspections last week a seasonal high of 62.0 MB. This comes on the heels of recent large Chinese purchases. In their report this week, USDA raised China’s import estimate 6.5 million tons to 24.0 million. However, that may be increased to 28-29 million tons in subsequent reports. Large purchases are needed as 60.5 MB must be shipped each week to reach USDA’s projection of 2.6 BB. While the bulls were disappointed with USDA’s report, the party in corn is not over just yet.
Soybean stocks are the tightest since 2013 at 120 MB which does not leave much wiggle room for a weather event this season if one were to develop. However, marketing plans or strategies should not be based upon weather. Meanwhile, export inspections were robust last week at 66.1 MB with China taking 31.4 MB or 47 percent of shipments. This was their smallest shipment since late December. Exports to them peaked in early November and have fallen 35 percent. However, the countries of Japan, Mexico, Egypt, and the Netherlands have taken up some of the slack. In other developments, harvest is off to a slow start in Brazil because of late planting and recent showers. As of last week, 4 percent of their crop was harvested compared to 16 percent a year ago. This means that it may be March before their exports get into full swing.
A forecast for cold weather moving across the central U.S. for the next several days has supported wheat. However, exports remain sluggish suggesting that further gains will probably have to come on the coattails of corn and soybeans. Export inspections last week were nominal at 16.2 MB and must average 22.5 MB each week to reach USDA’s target of 985 MB. While the USDA lowered global stocks 9.0 million tons this week to 304.2 million, they are still at a record level.
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